We start the new year with our usual quarterly look at the MYC4 portfolio performance.
The final quarter of 2012 was the strongest in three years in terms of volume with more than 1,075,000 euro disbursed. The positive growth trend of the previous three quarters thus continued which is clearly illustrated in the graph below. It is positive to note that the performance of the portfolio continues to be very strong. Around 73 % of the amounts disbursed in the last three years by the current providers has been paid back, 24 % is being paid back on time, 1.5 % is being repaid late, and net defaults are still kept below 2 %.
The Portfolio Performance Graph above shows the performance of loans disbursed since 2010 divided by quarter of disbursement. The colour blue shows funds that have already been repaid, green shows amounts that are being repaid on time, yellow indicates the balances on loans that are currently more than 30 days late, while red shows the net defaulted principal (i.e defaulted principal less recoveries).
The net return is positive at 1.7 % on loans disbursed by the current providers in the last three years. This is a small decline from the previous quarter’s 1.9 %, yet it is still up from 1.2 % in Q2 and -0,1 % in Q1. As a new key indicator, we have calculated the Return on Investment (RoI) for each of our active countries. The RoI is calculated as the result after defaults, interest, and currency divided by the total invested amount. This is quite a basic calculation which makes it possible to compare the performance of each country irrespective of portfolio distribution. The calculation is based on 4,434 loans that have all been either repaid or defaulted, thus making the figure a realised return – as opposed to the net result which is also based on loans still repaying. The overall RoI, as well as the country breakdown, is depicted in the graph below.
The RoI Graph above shows the realised investor return on loans disbursed since 2010 divided by quarter of disbursement. It is calculated as the result (interest, net defaulted principal, and currency gains/losses) divided by the total invested amount on loans fully repaid or defaulted.
It is clear from the RoI graph that the return is fairly dependent on currency fluctuations, especially in light of the realised currency gains/losses as can be seen in the profit & loss graph below. Investors have generally experienced currency losses on loans disbursed in 2010 as well as the first quarter of 2011, and subsequently received significant gains on loans disbursed in the second half of 2011. There have so far been some currency losses on the portfolio disbursed in 2012, but more than half of this portfolio is still outstanding and thus it is too early to know how this part of the portfolio will develop in the months to come. When looking at the country breakdown in the RoI graph, loans in Ghana and Kenya have been relatively unprofitable – although Kenya has improved lately – while Uganda, Rwanda and Tanzania have performed well when observing this over a three year span. (Note that the currency history for each of the five countries is updated on a weekly basis on the MYC4 platform and can be found under the country profiles.)
The Profit & Loss graph above shows the current result on loans disbursed since 2010 divided by quarter of disbursement. The colour green shows the earned interest, the red indicates the net defaults (i.e. defaulted principal less recoveries), and the purple shows the net realised currency gains or losses.
With the increased volume on the platform in 2012, the outstanding loan balance (OLB) has been on an upward trend throughout the year. More precisely, the OLB grew from 1.2 million in January 2012 to more than 2.2 million in December. The concentration of the portfolio has at the same time improved so that 40 % is now in Uganda (down from 50 % in Q3), 37 % is in Kenya (up from 30 %), and 15 % is now in Tanzania. It is expected that the portfolio in Tanzania will grow further this quarter to achieve an even better distribution between our three focus countries. Finally, the Portfolio at Risk above 30 days (PAR30) stayed below the 5 % target (industry best practice) for the fourth quarter in a row. The two graphs below show the development of the portfolio size and quality.
All in all, the portfolio has performed very satisfactorily in 2012 both in terms of growth and quality. We will be back in a couple of days with a look at the challenges and opportunities for 2013.
* Current Providers: GrowthAfrica, Gatsby Microfinance Ltd, Micro Africa Ltd, Premier Resource Consulting, Tujijenge Tanzania, Fusion Capital Ltd, Makao Mashinani Ltd, Tujijenge Uganda, BELITA, KEEF, Yehu Microfinance Trust, and SISDO.